It’s the new oil, and both need to be in the business mix

No commodity seems to be more top-of-mind in the American consciousness than fuel. The media reports its price swings so frequently that I know the numbers by heart—today gas is $4.27 per gallon today in greater Chicago, where I work and reside, and crude oil just hit a nine-month peak of $106.11.

Justifiably, we angst continuously over the price of petroleum, yet we seem to have forgotten another precious, indispensable and dangerously depleting resource: water. And without this life-sustaining substance, nothing else matters.

Like crude oil, water prices have surged in the last 12 years, doubling or tripling in many parts of the U.S, according to a recent USA Today study of 100 municipalities. Think of what that does to living expenses and business costs. And like crude oil, which is still threatened despite the current production boom here in the U.S., water is getting scarcer by the minute.

Many Americans could soon realize this, since water shortages due to high demand and climate change have become a realistic possibility in New York City, Washington D.C., Los Angeles and San Diego—where approximately 40 million Americans reside—as well as most of California and breadbasket states including Nebraska, Illinois and Minnesota, notes Columbia University Water Center’s new study, “America’s Water Risk: Water Stress and Climate Variability.” The vast majority of our food is produced in these water-stressed regions.

Analysts are constantly reminding us that new discoveries of ‘black gold’ can’t keep up with declining production from established sources and rising car production, especially in Asia. Likewise, we need to raise awareness when it comes to water scarcity.

Water scarcity Is everywhere

Unpardonably, 2.6 billion people—more than a third of the world’s population—don’t have access to clean water or live in water-stressed areas. And it is expected that water demand will exceed supply by 40 percent by 2030. Alan Hinchman, Global Market Director of Infrastructure at GE Intelligent Platforms, told my colleagues and me this disturbing statistic at a recent conference hosted by Tetra Pak for North American business leaders in the food and beverage industry. We called on GE since they’re now one of the world’s leading suppliers of sustainable water and process systems solutions.

Alan also told us that municipal water loss in Canada, Mexico and the United States ranges between 20 and 50 percent. Think about it: “for every 1000 gallons of water we use, somewhere between 250 to 1000 more [gallons] were pumped and lost by leaking pipes,” Alan said. This helps explain why North Americans have the largest water footprint in the world (currently 2060 gallons per person a day, according to nature.org). So not surprisingly, Alan warned us "North America has a huge water infrastructure bill coming due.”

Our water debt is imminent. It's not a pretty picture

How imminent? Alan doesn’t paint a pretty picture. Thirty percent of all major U.S. cities will be facing water crises in the next three years. Many are already there and arguing with their neighbors over water rights. Currently, Texas and Oklahoma are going at it over the four-state Red River and the dispute reached the Supreme Court. And the Great Lakes Compact, which involves eight states, is full of contentious issues between its signatories, noted Alan. So businesses must change the way they operate and consume resources right now. And even if water is available, “its costs have gone up over 200 percent in the last 10 years and are likely to go still higher,” Alan said.

“Competition for water is going to become very intense very soon,” Alan predicted. And the perils and problems of an inadequate or substandard water supply are upon us right now, though many are unwittingly ignoring the issue.

Ironically, most companies have sophisticated and effective sustainability programs in place. Yet water management seems to be one of their least obvious areas of immediate concern, noted Alan, basing his analysis on astute observation: “I’m seeing more and more companies locating in water-challenged areas, even though the increased demand and reduced availability of quality water is raising its cost and the risk of productivity disruptions.”

Obviously, food and beverage companies are highly dependent on quality water—as a raw material, for growing crops and to create and process their products. So water impacts our long-term costs, the quality of our products and our survival.

None of us can afford to waste water anymore. “Many civilizations have been crippled or destroyed by an inability to understand water or manage it. We have a huge advantage over the generations of people who have come before us, because we can understand water and we can use it smartly,” notes award-winning journalist Charles Fishman in his ground-breaking tome, “The Big Thirst: The Secret Life and Turbulent Future of Water.” And everyone can achieve this goal. For example, between 1980 and now, farmers have reduced their water use by 15 percent, but produce 70 percent more food. That’s a 100 percent increase in farm-water-productivity, notes Fishman.

How to create a water-use plan

Bottom line, “we’re quickly going from a world where water is relatively free to one where it will cost a lot. The government will have to figure out the infrastructure issues, but we have to streamline our own processes and make smart water decisions right now,” Alan warned. Like innovation, which is an entire business practice area rather than just a single, or even series, of new solutions, it must become an integral and deep part of an overall business strategy. Experts like Alan say there’s room in every step of the production process for improvement. Here’s how:

1. Determine the true cost of the water you use, starting with a comprehensive analysis of current water use, and allocate it more efficiently. A case in Australia illustrates this; water treatment giant Yarra Valley Water just had the British natural capital consultancy Trucost assess the real environmental costs of the water it uses, and found that one cubic meter of water actually ranges from ten cents to $15 AU in areas of extreme scarcity. Yarra Valley is now using this information to evaluate its new infrastructure investments, procurement strategies and product portfolios.

2. Carefully manage your supply chain. Most companies’ direct water use pales in comparison to their embedded water use, which means the amount of water required to produce every aspect of a product from start to finish. For example, according to the U.S. Geological Survey, to make a single slice of bread, single cup of coffee or grow one pound of corn it takes 10, 35 and 110 gallons of water, respectively. According to the GE Water Facts video, it takes 2,700 gallons of water to make one hamburger. The supply chain is a primary focus of water stewardship activity for companies that include Ikea and Levi Strauss & Co. Levi has reduced water by 50 percent since 2005 through sustainable cotton cultivation.

3. Minimize water use in your production process. At Tetra Pak, our Design for Environment (DfE) program considers every aspect of product design, production and operation to reduce water loss, also offering this as a competitive advantage to our customers. For example, our OneStep technology for processing of aseptic milk reduces water utilization by 60 percent and our Tetra Therm pasteurizers use cutting-edge intelligent automation to drive resource efficiencies that slash water consumption by up to 80 percent compared to older versions.

4. Increase water recycling and reuse. Manage water quality through responsible wastewater collection, treatment, recycling and disposal, and monitor activities that can potentially cause water quality problems. Reusing wastewater can reduce the potential impact of discharging pollutants into water sources, and/or reduce the demand on potable water supplies.

5. Design Water-Savvy Plants and Products. Sustainable design must go from ‘emergent’ to ‘entrenched’ right now. Any product design process must start with a total life cycle analysis that gauges its water impact. This means taking into consideration the entire supply chain, manufacturing and distribution process and how it will be recycled and/or disposed of to optimize its water metrics. Car manufacturers such as Nissan now chart and operationalize their water consumption to minimize water use on their lines, noted Alan. And many detergent makers, such as Procter & Gamble, Unilever and Colgate-Palmolive, have begun this process by switching to compact and concentrated formulas that use much less water.

All of these processes can help us better manage this precious resource, but are just a starting point. So here is to hoping it won’t be long before we all figure out how to not only implement them, but also come up with innovative new strategies to better these methods.

Michael Zacka is president and CEO of United States and Canada for the Swiss-based multi-national Tetra Pak.

Events

This year, Dairy Forum will examine the political landscape in the wake of the 2016 general election, hear from top experts about the issues and trends that are shaping the industry and discuss the policies that matter most to the dairy industry. In this session, meet IDFA's New President and CEO!

Once the dust settles after hard-fought presidential and congressional races, what food and agriculture policy priorities will emerge? Immigration? Trade agreements? The next Farm Bill? This candid conversation among former chiefs of staff from the Department of Agriculture will look at how campaign positions become policies.

Products

An at once an all-inclusive guide to the meaning of hundreds of technical terms and ideas needed for ice cream manufacturing, as well as a practical introduction to the ingredients, freezing methods, flavoring, and packaging of ice cream, sherbet, sorbet, gelato, frozen yogurts, novelties and many other kinds of frozen desserts.